4) Does the technology serve only a relatively small niche of the population or does it improve the lives of a significant number of people, including those who need it most?---------------------------------------------------------------------------------------------------------The expert who wrote most of this article for this blog sent me this note in an email (this is an expanded version of his comments he asked me to use here):

"In 2012 - it was apparent (to me) that the blockchain was technically limited.. fundamentally designed in a way that made it impossible to scale beyond a few (hundred thousand) users, or ever grow to a national scale system.. And it turns out this was well founded. The transactions are severely limited - and the community now agrees. It took 3 years!

The alarming outcome of this - is not the speed or lack of expertise - it is that they found a fix... Which means bitcoin has none of the "permanent security features" they all claim. The strength of bitcoin was always that it was cast in stone. However, a single coder has been able to deploy a core change to the code - which slows transactions, but boosts capacity. This seems okay - until you consider that this breaches the fundamental principle of the protocol's security claim.

Simply "convincing half of the miners to adopt BitcoinXT" - as has been proposed - is also the same in nature as deciding to seek a private consensus amongst miners (even just one) to one day "delete all transactions from wallets/addresses/accounts that have ever been affiliated with X."

(added note: X could be (impacted by) any new rule, including setting all wallet values to $0.00 for any wallet that has, e.g., traded with starbucks, paid taxes, or received income from the US millitary). XT is the proposed new version of the BlockChain 'rulebook' ("BIP") to deal with the size limitations of the current blockchain).

His email also containeda link to this articlewhich is an interview with Gavin Andresen. It contains the quotes below which illustrate how accurate our expert was back in 2012 when he detected this problem in his research on the technology. Mr. Andresen pretty much says what we have said here on the blog in terms of how hard it would be for Bitcoin to gain broad mainstream adoption (see last question below).Here are some quotes from the article:"The way things are going, the digital currency Bitcoin will start to malfunction early next year. Transactions will become increasingly delayed, and the system of money now worth $3.3 billion will begin to die as its flakiness drives people away. So saysGavin Andresen, who in 2010 was designated chief caretaker of the code that powers Bitcoin by its shadowy creator. Andresen held the role of “core maintainer” during most of Bitcoin’s improbable rise; he stepped down last year but still remains heavily involved with the currency (see “The Man Who Really Built Bitcoin”).

Andresen’s gloomy prediction stems from the fact that Bitcoin can’t process more than seven transactions a second. That’s a tiny volume compared to the tens of thousands per second that payment systems like Visa can handle—and a limit he expects to start crippling Bitcoin early in 2016. It stems from the maximum size of the “blocks” that are added to the digital ledger of Bitcoin transactions, the blockchain, by people dubbed miners who run software that confirms Bitcoin transactions and creates new Bitcoin (see “What Bitcoin Is and Why It Matters”)."How serious is the problem of Bitcoin’s limited transaction rate?

"It is urgent. Looking at the transaction volume on the Bitcoin network, we need to address it within the next four or five months. As we get closer and closer to the limit, bad things start to happen. Networks close to capacity get congested and unreliable. If you want reliability, you’ll have to start paying higher and higher fees on transactions, and there will be a point where fees get high enough that people stop using Bitcoin."What will happen if nothing is done?

"Transactions will get unreliable and it’ll get worse and worse over time. My fear is there’ll be no critical event that causes people to react—Bitcoin just kind of has a long slow death. I’m trying to set off alarm bells for ‘You know, guys, if we don’t do this, Bitcoin will be dead in four years.’ It’s not easy to sell that, especially when there’s so much controversy."

How widely established is Bitcoin now anyway?

"It’s firmly established in a few niche areas and growing there. An early use case is people who pay international contractors in Bitcoin because it’s easier than figuring out how to transfer dollars into local currency. The major barrier to it going mainstream anywhere is there has to be some way of getting Bitcoin as part of your normal activity. Until part of your paycheck is regularly paid in Bitcoin, I’m not sure how it would really go mainstream. I can imagine places in the world where there are not functioning banking systems, or payroll systems, where it could go mainstream first, because you’re not trying to replace the way people are already doing something.

I still say do not invest your life savings in Bitcoin. It is still an experiment and it could still fail." --------------------------------------------------------------------------------------------------------Added note: A thank you to Willem Middelkoop for his mention on his twitter feed of this article.

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